Angola's rehabilitated Caminho de Ferro de Benguela has spawned government-backed construction projects and a new, Chinese, middle class. The Africa Report delves beneath the success story, where opaque deals keep far too many on the wrong side of the tracks.

On an early Sunday morning, a China Railway Engineering Corporation locomotive rolled into Luau's newly rebuilt station – all glittering steel and chrome but otherwise still empty – to drop off a team of Chinese workers who had come to construct Luau's new international airport 10km outside of town.

We will fix all of this up, maybe make a museum. People know so little about the CFB history

The train driver, his face streaked with exhaustion, squatted in the doorway of his ragged-looking locomotive and took a deep drag on his bottle of green tea as he squinted into the sun at the pair of China International Fund (CIF) guards who had accompanied the train from Luena the previous night.

"This company, it's no good. Working all the time, Saturdays, Sundays, all the time," he grouched in pidgin Portuguese before stalking off shouting directions for offloading of an open wagon filled with suitcases belonging to the group of camouflage-clad Chinese workers and their Angolan helpers.

Exactly what this company is – the mysterious, Hong Kong- based CIF – is key to understanding what is unfolding in Angola.

The government has channeled major Chinese-financed infrastructure deals, backed by Angolan oil sales to China, through this entity.

In the murky world of Angolan business, everything is clear as mud as a battle for control over mineral resources in Angola and the Democratic Republic of Congo's (DRC) Katanga Province unfolds along the Caminho de Ferro de Benguela (CFB) railway.

"The government has great plans forus in Luau," said municipal official Senhor Ignacio contentedly, sitting in his modest home close to the main road. "New airport, the railway, big bonded warehouses, new houses. Have you seen the new road to Luanda yet?"

In the Angolan political universe, good connections to the capital are indicative of one's standing, and Senhor Ignacio's star clearly was rising.

From a bustling city of 90,000 people in the 1970s, many of whom were employed on the railroad that crosses into neighbouring Katanga, Luau became little more than a smugglers' entrepôt during the lost years of Angola's 27-year-long civil war.

Cross-border relations are still sensitive following Angola's often brutal expulsion of thousands of illegal Congolese diamond miners in 2008.

Pedal power

For the people across the river from Luau in decrepit and dirty Dilolo DRC, Angola represents progress and opportunity: dozens of young men, known as 'Gadaffis,' swarm to and fro across the bridge on the border, carrying 20-litre cans of fuel that are then transported by bicycle as far as 150km into Katanga.

"It's our only chance to make some money," explained one man among a group of five pushing fuel-laden bicycles. Another, who has acquired a three-wheeled Chinese-made motorbike, said he had made enough money in a year to build himself a house.

Fuel is dispensed into plastic containers directly from a fuel tanker owned by state oil company Sonangol in Luau. But by the time the fuel reaches Kisenge in the DRC, it will have trebled in price, he explained.

Before the first CFB locomotives rolled into Luau a month ago, there were few places more remote than this hardscrabble town on the border with Katanga.

Reaching it by road from Luanda, about 1,500km to the west, was a 10-day, bone-jarring journey over heavily mined roads and simple bridges.

But following the Angolan government's first few oil-for-infrastructure deals with China in 2002 and the seemingly wholesale adoption of the Chinese state's economic development model with all its ideological underpinnings, even Luau's main street has been transformed into a broad boulevard, lit up at night by streetlights of a peculiar yellowish hue.

Northeast of Luau, a newly tarred road constructed by a Chinese team leads past the new international airport under construction.

Dozens of Chinese trucks churn up red dust as teams of Chinese workers – Angolans appear to be relegated to the most menial of jobs only – laid the steel mats for the all-weather runway under a boiling hot sun.

Who exactly the airport is intended for is not clear: Luau has fewer than 12,000 people, most of them extremely poor after three decades of official neglect of what was long considered a rebel stronghold.

Ownership labyrinth

For the past two weeks, we have been following the Lobito corridor, the nearly 4,000km Central African plateau stretching from Lobito to Lusaka via Lubumbashi.

It was here that Sir Robert Williams constructed the privately owned CFB line between 1900 and 1929 to provide the shortest possible route from the copper belt of Katanga and Zambia to Europe's foundries.

Looks good from far but far from good when you get close

Although the newly rebuilt CFB is ostensibly state-owned, it is controlled by Vecturis (Angola) Lda., itself owned by the DT Group, a sprawling fuel distribution, logistics and mining conglomerate owned by General Leopoldino 'Dino' Fragoso do Nascimento and his associates, as disclosed in recent filings in Liechtenstein for the listing of their Puma Energy International concern in Singapore.

Angola's national press reports that by 2015 the CFB is expected to transport 20m tn of goods – but whose goods, and for whose profit?

One part of the answer lies in the fact that the DRC government, as a token of appreciation for saving Laurent Kabila's regime from being overrun in 1999, agreed to buy much of the country's fuel from Angola.

Another part lies in the fact that the DRC holds large supplies of copper, cobalt and manganese.

Although the road to Luanda is now paved, the one from Luau to Luena, the capital of Moxico Province, is still a pot-holed drive of 17 hours. As a result, trade between Luau and Luena remains very limited.

Rail transport is not cheap. It costs $700 to transport a vehicle from Luena to Quito or Huambo, the next two cities along the line, and you have to hire your own crane to offload it.

The youthful station manager in Luena seemed slightly embarrassed about the lack of a regular service as he showed us around the old workshops where a dozen ancient steam locomotives sit, silently rusting away on a sideline.

"We will fix all of this up, maybe make a museum. People know so little about the CFB history," he said.

On the road down to Quito – yet another 250km of rutted track snaking through old battlefields – one began to get the idea that this neglect was a measure of control.

All goods headed for Luau would have to make use of the Empresa do Caminho de Ferro de Benguela's services.

Then there is the astounding sight of Quito: brand new roads, a shiny new governor's palace all lit up and the kind of traffic lights previously only seen in big Chinese cities.

This is a revolution for a town once reduced to rubble during a 55-day siege by the União Nacional para a Independência Total de Angola rebels. Even at a very late hour, the streets were teeming with motorbikes and flashy 4x4s.

Appearances were, however, deceptive. Most people still live in abject poverty, with an estimated 70% making do with less than $2 a day.

As we progressed along new roads we could spot Chinese workers everywhere: driving trucks, digging ditches, working on the railway line, building up massive new government buildings in each sizeable little town.

All of the offices had an identical design: a conference block flanked by two pink hotel blocks, pink being the official government colour.

The CFB terminates in Lobito, and its harbour is a revelation: a massive new container facility, an oil refinery on the outskirts of town and huge bulk ore facilities.

Questions as to who would actually control these facilities riled officials. Angola's trade mission in Washington DC, the only state organ to respond to queries, refused any further correspondence on the topic when pressed for clarity.

This, in a country where, with the exception of the diamond mines, there has not been a single operational mine of any kind since 1975.

Whose ore was to be shipped remained a mystery. Local officials referred us to the transport ministry and CFB, neither of which responded to queries.

And all along the way to Lobito, there were the ubiquitous Puma Energy service stations, part of the DT Group's fuel distribution network.

Angola appeared to have completely embraced the Chinese centrally planned economic development model, down to the political control that is part of the package.

Examples of China's mass housing model of towering apartment blocks, replete with schools and daycare centres, can be seen along the capital's periphery.

But new developments like Kilamba Kiaxi, designed to house a million people, are still largely empty.

New privileged class

In Angola's business world, there is often little distinction between public and private interests at the highest levels of government.

To understand why this is the case, one has to understand Angola's financial system where Sonangol, the Banco Nacional de Angola and the Futungo, as the president's office is known, are powers unto themselves.

Sonangol is managed by a group of 10 generals – the so- called Casa Militar – who decide where and how Angola's oil income is to be distributed, a Johannesburg banker who dealt with them on the financing of the Lobito refinery told The Africa Report.

But there now appears to be a second privileged class. On the massive new ringroads circling Luanda, roadside signs in Mandarin advertise anything from brick making to cheap accommodation.

The Chinese, of whom there are now estimated to be 150,000 living in Angola, appear to have taken over most of the construction industry. Their cheap but quick methods come with a hidden price tag.

The flashy new apartments where we were staying showed the work to be rather slipshod, including missing fixtures and cracks in walls and floors.

"Looks good from far but far from good when you get close," our host quipped.

Angola clearly is booming, perhaps the inevitable result of some 30 years of pent-up demand and an overbearing Marxist state where written permission had to be sought to paint your house.

It is the foreigners and their friends in the elite who appear to be benefiting most: food is incredibly expensive, with even a simple meal of fried fish in a beachside shack in Cahala, in the shadow of the Futungo, costing $15.

The country is going places, but the gap between rich and poor is yawning ever wider.

And with political reform seemingly as remote as ever, not even the Chinese can fix that. ●